Aligning Business and IT Strategy

Strategic Alignment

Summary of the Strategic Alignment Model by Venkatraman. Abstract

Venkatraman, Henderson, Oldach (1993)

The Strategic Alignment
model of Venkatraman, Henderson and Oldach
is a framework to Aligning Business and IT Strategy.

Venkatraman ea argue in 1993 that the
difficulty to realize value from IT investments is firstly due to the
lack of alignment between the business and IT strategy of the
organizations that are making investments, and secondly due to the
lack of a dynamic administrative process to ensure continuous
alignment between the business and IT domains.

They describe Four Dominant
Alignment Perspectives towards the analytic alignment of
Business and IT:

Strategy
Execution: this perspective views the business strategy as the
driver of both organization design choices and the logic of IS
infrastructure (the classic, hierarchical view of strategic
management). Top Management is strategy formulator, IS Management is
strategy implementer. [Arrow 1]

Technology Potential: this perspective also views the business
strategy as the driver, however involves the articulation of an IT
strategy to support the chosen business strategy and the
corresponding specification of the required IS infrastructure and
processes. The top management should provide the technology vision
to articulate the logic and choices pertaining to IT strategy that
would best support the chosen business strategy, while the role of
the IS manager should be that of the technology architect - who
efficiently and effectively designs and implements the required IS
infrastructure that is consistent with the external component of IT
strategy (scope, competences and governance). [Arrow
2]

Competitive Potential: this alignment perspective is concerned
with the exploitation of emerging IT capabilities to impact new
products and services (i.e., business scope), influence the key
attributes of strategy (distinctive competences), as well as develop
new forms of relationships (i.e. business governance). Unlike the
two previous perspectives that considered business strategy as given
(or a constraint for organizational transformation), this
perspective allows the modification of business strategy via
emerging IT capabilities. The specific role of the top management to
make this perspective succeed is that of the business visionary, who
articulates how the emerging IT competences and functionality as
well as changing governance patterns in the IT marketplace would
impact the business strategy. The role of the IS manager, in
contrast, is one of the catalyst, who identifies and interprets the
trends in the IT environment to assist the business managers to
understand the potential opportunities and threats from an IT
perspective. [Arrow 3]

Service
Level: This alignment perspective focuses on how to build world
class IT/IS organization within an organization. In this
perspective, the role of business strategy is indirect. This
perspective is often viewed as necessary (but not sufficient) to
ensure the effective use of IT resources and be responsive to the
growing and fast-changing demands of the end-user population. The
specific role of the top management to make this perspective succeed
is that of the prioritizer, who articulates how best to allocate the
scarce resources both within the organization as well as in the IT
marketplace (in terms of joint ventures, licensing, minority equity
investments, etc.). The role of the IS manager, in contrast, is one
of business leadership, with the specific tasks of making the
internai business succeed within the operating guidelines from the
top management. [Arrow 4]